The controversy surrounding the recent chart battle between DJ Khaled and Tyler the Creator — in which a bundle promoting Khaled’s album was disqualified from adding to its sales tally for the May 24 Billboard 200 album chart, allowing the No. 1 spot to go to Tyler’s “Igor” — has been a first-class problem for Sony Music, the parent company of Epic Records and Columbia Records, home to Khaled and Tyler, respectively.
After all, with the top two albums in the country, what’s not to celebrate? But the increasingly ugly and intense squabble — which has seen Khaled threaten to sue Billboard, according to unconfirmed reports — has created an awkward situation for the corporate brass as it tries to keep the peace between the two sibling labels.
At issue here is not just Khaled’s 101,000 direct-to-consumer sales that were disqualified. His album, “Father of Asahd,” was included with sales of energy drinks through an e-commerce site, Shop.com; Billboard determined that the site and its parent company, Market America, had crossed a line by encouraging unauthorized bulk sales, according to the New York Times.
Another issue is the $5 million sources say Epic spent to record and market Khaled’s album.
Why was it so costly? One word: features. From Jay-Z to Lil Wayne to Travis Scott and Post Malone, SZA, John Legend and the late Nipsey Hussle, to name a few, such guest appearances don’t come cheap — and Khaled presumably expected to get what he (or, more likely, Epic) paid for.
Further complicating relations, sources tell Variety that Sony has an unofficial policy of discouraging infighting when it comes to sibling labels’ competing albums on the charts, much like the company’s mandate that its labels not overbid each other when competing to sign acts — and to not poach employees from each other, either.
Khaled’s displeasure with the situation has become a matter of public record. He and several associates made an in-person appearance at Sony Music’s New York headquarters last week, where he berated Epic staffers for “several hours.” Several Sony employees describe hearing yelling from the Michael Jackson conference room at the company’s Madison Avenue offices. Khaled then made his way to the offices of Roc Nation, the Jay-Z-owned management concern that has handled the multi-hyphenate’s career since 2016, and gave an encore performance.
Khaled’s ire was aimed at least in part at Epic chairman Sylvia Rhone, with his main complaint centering around issues with downloads that fans who bought into the bundle were experiencing. But while outlets like the New York Post characterized Khaled’s outburst as a “temper tantrum,” a source close to the artist described Khaled as “passionate and concerned,” noting that “he didn’t threaten [Rhone].”
Still, Sony Music’s corporate brass was said to be “disappointed” with Khaled’s display.
A day after the chart reveal, Rhone was several thousand miles away — in France, where she was scheduled to be a keynote interview at the Midem conference — which did little to assuage team Khaled from a “two-day fiasco.” However, she came down with food poisoning after arriving and was forced to cancel; music attorney Dina LaPolt, who had been scheduled to interview Rhone, delivered a fiery keynote of her own instead. (The following morning, Rhone had recovered sufficiently to accept Midem’s Hall of Fame award at a brief outdoor ceremony.)
Speaking to the New York Times, Roc Nation COO Desiree Perez said, “We dispute their decision on behalf of DJ Khaled and, frankly, every artist who is forced to navigate bundling an album download with an inexpensive item that still effectively represents their brand. It’s confusing and demeaning to the art.”
While it remains unclear why Tyler’s album — which also was promoted via four different bundles, and 68,000 of his 74,000 credited album sales were also D2C — was able to qualify where Khaled’s wasn’t, the true culprit in the scenario is clearly the practice of bundling, which one label insider described as “just another form of payola – a way to goose the numbers.” Perez agrees, as she told the Times, “We’re obviously not fans of bundling, nor should anyone who cares about artists making music. But our hands are being forced by Billboard’s desperate, last-ditch effort to keep streaming from eliminating what’s left of music downloads.”
Indeed, without the bundling, Khaled would have come out ahead, which explains his June 6 post on Instagram boasting, “Still celebrating the album that was the MOST streamed and digital sales.”
How did they account for such anomalies in the SoundScan era when CDs were still selling, but bundles also existed? The use of bundling is nothing new. As former Universal Music Group Distribution head Jim Urie notes, Taylor Swift cut a deal with Papa John’s Pizza to sell her album “Red,” with a large one-topping pie for $22. The problem was, according to Urie, the pizza company didn’t trust its drivers to deliver the CDs, so most of them never got to consumers, prompting Papa John’s refusal to pay for the albums they had agreed to buy in the first place.
“There have been countless occasions where the SoundScan results have been too close to call,” recalls Urie. “The No. 2 label would bitch that all of their sales weren’t counted, or they’d accuse the winner of paying off independent retailers for scans. That’s been going as long as SoundScan has been around.”
“Depending on how big the artist is, you start getting ‘the Don Ienner call’ and he’s going crazy,” Urie continues, referring to the notoriously hot-headed former Columbia Records chief. “It’s a difficult situation. Billboard sets the rules, but then they bend them under pressure.”
As far as the rules for counting album sales that come from bundling, Urie insists, “There has to be a legitimate opt-in for the consumer, for instance, a redemption code for a digital album.” The veteran distribution exec describes a situation where the label gives a special discount to Papa John’s for a one-way purchase of 250,000 Taylor Swift albums, “When they ended up only giving away 50,000, that’s where you get into chart controversies. And even though Papa John’s agreed to buy those albums, in the end, they still tried to stiff us, and we were forced to take some back.”
Ultimately, says one insider privy to the charts process, there are no written rules to follow, which makes the accounting frustrating to say the least. Billboard has said it is in the process of revising its bundling rules. Company president Deanna Brown defended the Khaled/Tyler decision, telling the Times, “In this particular instance, we saw an organization encouraging purchases among their members by promising them material and organizational benefits.”
Urie contends that the music industry’s insistence on giving more weight to physical sales and downloads on the album chart is a big part of the problem.
“I absolutely believe that a straight streaming count should be the chart methodology at this point in time,” he says. “Streaming was close to 80% of the U.S. market last year, and it’s only going higher. I don’t know why we just don’t jump into the future. There is no competitive advantage to bundling; every label is doing it now. I believe the industry just has to wake up to the reality of streaming.”
Tyler vs. Khaled: the Week 1 numbers
Tyler the Creator “Igor”
Total Activity: 164,866
Streaming: 122.8 million
Song sales: 10,000 Digital Tracks
Album sales: 74,000
DJ Khaled “Father of Asahd”
Total activity: 135,802
Streaming: 123.2 million
Song sales: 72,000 Digital Tracks
Album sales: 33,834